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Sen. Dick Lugar of Indiana was handily defeated Tuesday in the primary when his GOP challenger – with the help of the National Rifle Association and Tea Party activists – blasted him for being an out-of-touch moderate whose votes on budget and gun issues were seen as too liberal.

The GOP primary turned out to be a classic contest between the state's "country club," or more moderate Republicans, versus the much more conservative ranks of the GOP base who were demanding more action on the deficit and hot-button issues like gun rights.

"We are experiencing deep political divisions in our society right now," Lugar, who is 80, said in a statement after the results were known. "These divisions have stalemated progress in critical areas. But these divisions are not insurmountable."

State Treasurer Richard Mourdock challenged Lugar on a number of issues, yet the common denominator evolved around the senior statesman not being connected with the voters he has represented for so long combined with the need for someone who would produce a more conservative voting record on fiscal issues.

"Sen. Lugar has sided too many times with the Democrats," Stacy Rutkowski told The Associated Press. "He's been there six terms, and it's time for some new blood."

Yet Lugar warned the new Republican nominee that he will face obstacles that partisanship will not overcome and he may find himself in a position that will upset the very groups that worked to elect him.

"He will find that unless he modifies his approach, he will achieve little as a legislator. Worse, he will delay solutions that are totally beyond the capacity of partisan majorities to achieve."

But with Lugar's defeat, Democrats now believe they have an opportunity to capture another seat and will be positioning their nominee to wage a more centralist, moderate campaign they feel is in line with the state's voters.

Sen. Patty Murray (Wash.), who chairs the Democratic Senatorial Campaign Committee, said the general election contest this fall would be between an "independent" Rep. Joe Donnelly and an "extreme" Mourdock.

"Joe Donnelly has been a loyal soldier for Barack Obama," Mourdock wrote in a statement. "He voted for Obama's stimulus program and his bailouts. Donnelly voted for Obama's policies so often that the President calls him his partner."

Yet the fall matchup highlights the potential vulnerabilities for both Republicans and Democrats nationwide.

Incumbents, especially those who have sided with President Obama on his fiscal programs find themselves the target of a frustrated electorate who are looking for work, paying more for gas and have seen the values of their homes fall.

On the other hand, challengers, especially those associated with the Tea Party and other conservative causes will be painted as "extremists" who would be unwilling to reach across the aisle to reach an agreement on budget issues.

Both President Obama and Vice President Joe Biden reacted to Lugar's defeat with Obama saying, "[H]e has served his constituents well, and I wish him all the best in his future endeavors."

Biden, who served with Lugar in the Senate and on the Foreign Relations Committee, phoned the senator to thank him for his service. "We never had a cross word," Biden told The Washington Post. "In matters of foreign policy, we seldom disagreed."